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Trade your harvest yourselves

You can trade your harvest yourselves with GrainTerminal

PAWLICA company, which is engaged in the design and construction of post-harvest lines and storage facilities, launched a new application on www.grainterminal.cz this spring. It is dealing with a platform for trade in agricultural commodities and a tool for direct contact between producers and processors (consumers). Ing. Petr Pawlica, MBA, managing director of the company, informed about the new project prepared in cooperation with Československá obchodní banka (ČSOB) at exhibition Naše pole in Nabočany in mid-June.


Why did you create this application?

Our motivation was to create a single central place where both processors and producers in the cereals and grain sector could meet thanks a simple web application and be able to make their deals in a simple and safe way within the region of Central Europe. We want to allow the farmers to sell directly to Germany, Austria, or even to Poland as there is a huge demand for cereals. In this way we could revive legal cross-border trade.

With our application we responded to farmers' demands. They repeatedly criticized the exiting practice of selling the harvested commodities, they were not satisfied with the selling prices achieved, they met with the lamentable morale of their business partners in many cases, and often they did not even get their money.

The actual realization price is determined by the conglomerate of the dominant player on the agrarian commodity market, along with several remaining "independent purchases" that have only low motivation as to the offering of distinctively more attractive prices. Another group is represented by trading companies that are able to dazzle with their offering price, but later the seller finds out that it is not so exclusive. Besides them, there are also smaller merchants who only sell the goods. They attract farmers with good-looking prices and they hope to be lucky in the speculation. They often embellish their “business” with late payments to the seller, and when the going gets tough, they fail to meet their obligations, old company ceases to exist and a new one is founded.

It is quite common that cereals on their way to the processor meet, from the point of view of accounting, all three above mentioned players. That's why we wanted to create a safe place for direct contacts between sellers and buyers.

How does it work?

The application on www.grainterminal.cz can be used only by registered, verified, and reliable users. These are, on the one hand, the producer-farmers and the processors on the other hand, or possibly the companies exporting the European overproduction outside our continent. Skipping even one segment in the resale chain creates a room for achieving a markedly advantageous business economy for individual users.

The trading is realized based on FCA seller term, as defined in internationally accepted Incoterms 2010 delivery terms. The money from the customer is deposited at the bank and this gives the farmer a guarantee that once he fulfils his obligation to deliver the goods in given quality and quantity, it will be automatically transferred to him on the basis of the contractual documents. Deposit account transactions are on-line shown in the application, so both contractual parties can check whether the money for specific contract is already deposited. If this does not happen, under our business terms the seller is not obliged to load even a kilogram of goods. On the other hand, if the seller does not fulfil his obligation, the money returns back to the buyer's account.

An important feature of the application is also the generation of accounting documents. On the one hand, the farmer can be sure that the price will be negotiated directly with the end customer, and the application also ensures a transparent payment. The end customer can choose from a large number of registered vendors.

What does the registration mean?

The new user registers via the web form, where he fills in the basic information about the company and, if necessary, documents the right to act on behalf of the company. Then we, as the operator and the administrator of the platform, verify the accuracy of the data from the available sources or personally visit the company. After the verification process, the user can enter offers, e.g. fill declared product parameters in the form. The user who has entered the offer and the user requesting the commodity can start negotiating the terms of the deal through the user interface - this communication is limited and accessible only to the given pair. If the other party accepts the submitted offer, the contract is concluded legally and bindingly.

The application automatically generates written form of the contract, saves it to the user accounts of both parties, and simultaneously sends it to the e-mail addresses of the parties. According to both European and Czech law, the contract is legally concluded at the moment of irreversible step - acceptation - within the application. However, it is advisable for each of the users to exchange signed contracts in paper form.

The system, of course, allows for the variability of business terms and it is possible to conclude contracts with immediate physical realization as well as commodities futures where the goods can be transferred over a period of several months up to one year. This application also has a module for the practical realization of the trade - transport and takeover of goods on the basis of the storage, transport and income possibilities of the contractual parties.

Could you remind in what form do you cooperate with ČSOB?

An integral part of the system is formed by the function of payment point, namely through deposit accounts in Czech Crowns, Euros or Zlotys. Just ČSOB is the partner of the project in the field of settlement of purchase prices - the accounts in individual currencies are kept here under the name “deposited funds for Grainterminal operations”.

They are subject to a special control mode when account owner gives up a part of his rights in favour of transparency and credibility. The choice of ČSOB was a logical step on our part, because our company has been cooperating with this bank for a long time and it is one of the strongest and largest banking houses. This bank also has responded very flexibly to our intentions and needs.

How is the quality of goods guaranteed and how the complaints are dealt with?

Of course, we provide for the discrepancy between the declared parameters and the results of the analysis at the buyer. Therefore, during the loading of the goods, the seller, in the presence of the purchaser or authorized carrier, takes three control samples and places them into three sample bags provided by the administrator and marked with a barcode, seals them and clearly fills in appropriate data on their labels.

The seller and buyer or authorized carrier confirm the completed data by a signature on all three bags with goods samples and on all separable coupons having the same barcode as each individual sampling bag. The seller retains the two sample bags, tears off a coupon with a barcode from each of these two sampling bags and hands it over to the purchaser or to the carrier authorized by him. The seller is required to properly store two samples of goods with all remaining coupons with barcodes for the same delivery for one month from the delivery of the goods.

If the buyer complains about the quality of the goods, we pick up one sample of the claimed delivery at the seller, analyse it in an accredited independent laboratory, and report the results to both parties. In our business terms we have incorporated an arbiter position for such cases and we are entitled to propose both parties a solution for such situations, including the amount of possible price reduction because of poor quality. Of course, we do allow users to resolve the situation through a classical court route, but in a situation where the goods are at the buyer and the money is blocked on the deposit account until the resolution of the dispute, it is better for both parties to accept a reasonable conciliation solution, as offered by us.